- Countries
- US and Canada
- Includes
- Registrations, filings, year end slips
- Owner payroll
- S corporation salaries set and documented
- Contractors
- 1099-NEC and T4A handled at year end
Payroll in the United States and Canada
Wages calculated, tax withheld, deposits made, returns filed and year end slips issued. Including the registrations that have to exist before the first person is paid.
- Decides everything
- Where the employee physically works
- Not
- Where the company was formed
Payroll goes wrong at the beginning, not at the end.
The mechanics of paying someone are largely automated now. What is not automated is deciding which accounts the company needs, in which jurisdictions, before the first payment leaves. That decision depends on where the person physically works, which since remote hiring became normal is frequently not where the company is.
Hire somebody in Ohio while your LLC sits in Wyoming and you have probably created an Ohio withholding obligation, an Ohio unemployment obligation, and a question about whether the entity should be registered to do business in Ohio at all. None of that is difficult. All of it is expensive to fix a year later, because the liability accrues from the first payment rather than from the date you noticed.
The same is true across the border. A Canadian corporation paying someone in Ontario needs a CRA payroll account and, depending on the work, workers' compensation coverage. We set these up as part of onboarding rather than sending you a list.
What has to exist first.
| United States | Canada | |
|---|---|---|
| Federal registration | An EIN, plus federal income tax, Social Security and Medicare withholding. | A CRA payroll account under the business number, for income tax, CPP and EI. |
| State or provincial | State withholding and unemployment insurance accounts in every state where an employee works. | Provincial requirements vary, including workers' compensation registration and, in some provinces, health levies. |
| Periodic filings | Quarterly Form 941 and annual Form 940, plus state returns on their own schedules. | Source deductions remitted monthly or more often depending on size. |
| Year end | W-2 for employees and 1099-NEC for contractors, with copies to the agencies. | T4 slips and the T4 summary, filed by the end of February. |
| The usual trap | Registering in the state the company was formed in rather than the state the employee sits in. | Treating a contractor as a contractor when the working relationship says otherwise. |
Common questions
If they are genuinely an employee, yes, from the first payment. There is no threshold below which withholding becomes optional. The cost of running one person properly is small. The cost of unwinding a year of unwithheld wages is not.
Only if they genuinely are contractors, which is decided by how the relationship works rather than by what the agreement calls it. Control over hours, method and tools, exclusivity, and who supplies the equipment all matter. Misclassification is one of the more expensive findings in an examination, in both countries, and it is assessed against the employer.
Enough to be reasonable for the work you do, judged against what you would pay somebody else in your industry and market. There is no safe percentage. We set it with documented reasoning at the time, which is what stands up later.
Then you likely need withholding and unemployment accounts in all three, and possibly a foreign qualification for the entity in each. Remote hiring creates state obligations that surprise people, and it is much cheaper to register before the first payroll than to correct afterwards.
Hiring your first person?
Tell us where they will physically sit. That single answer drives every registration you need.